Markets: Stocks Give Back Tuesday's Gains

Stocks fell today, as
chilling forecasts from two of the market's biggest blue-chip
names, including computing giant Hewlett-Packard, idled buyers in an early June rally.

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HP warned the slowdown in information technology was going
global, while banking powerhouse J.P. Morgan Chase, a fellow component of the Dow average, said it expects lower trading revenues in the quarters ahead.

HP shares fell $1.34, or 4.46 percent, to $28.71, while
J.P. Morgan Chase gave up $1.66, or 3.42 percent, to $46.84.
Combined, the declines in these two stocks accounted for almost
20 percent of the Dow's drop. Before today, the market had
risen for four days in a row.

Corporate News

"Earnings concerns are going to continue to bedevil the
market," said Jack Shaughnessy, chief investment strategist at
Advest. "Companies in the middle of June begin to make
announcements about second-quarter earnings, and those
announcements may not be very positive."

Elsewhere, investors were particularly on edge with
computer chip giant Intel scheduled to give a
preliminary report on its quarter ending June 30, Thursday.
Intel rose 9 cents to $29.82.

Oil shares fell in line with crude oil prices, which fell
after inventory data soothed worries that Iraq's halt of
exports would cause a supply crunch in the U.S. market. Oil
services giant Exxon Mobil fell $2.15 to $89.40.

Network computer maker Sun Microsystems Inc. was
the Nasdaq's most heavily traded share, up $1.07 at $18.09.
Traders cited a research note from Goldman Sachs, which said
that while the pain caused by "externally induced slowing,
amplified by some internal miscues" is not behind the company,
the worst of it is.

Last week, Sun cut its current quarter profit forecast and
said sales would be 10 percent or more below Wall Street
estimates because of economic weakness in Europe.

"The feeling among market participants is that the economy,
if it hasn't turned yet, is about to turn, that the Fed's magic
is working," said Peter Coolidge, managing director of equity
trading at Brean Murray & Co., referring to the Federal
Reserve's recent interest-rate cuts.

Still, traders are cautious.

"Obviously, everyone is going to keep an eye out for what
pre-warnings we might get, so there's a caveat with this
rally," Coolidge said.

On the rate-watch front, Federal Reserve Bank of Richmond
President Alfred Broaddus said late Tuesday the central bank
does not have much more room to help the flagging U.S. economy
with interest-rate cuts because rates are already low. He
added, though, that the economy may not have hit bottom yet.

The Fed's aggressive rate cuts — 2-1/2 percentage points
so far this year — have helped underpin the stock market in
recent months by raising hopes such action can re-energize the
sagging U.S. economy. The Federal Open Market Committee, the
Fed's policy-making body, next meets to determine the direction
of interest rates on June 26-27.

Wall Street will be tuned in for a speech by Fed Board
Governor Laurence Meyer this afternoon when he is scheduled to
talk about "What happens to the New Economy" before the New
York Association for Business Economics.

Tuesday’s Recap

On Tuesday, stocks climbed after upbeat reports from tech
firms Lucent Technologies and Xilinx bolstered expectations that the worst of the economic slump may
be over.

The Nasdaq composite index gained for the fourth
day, its longest rally since a seven-day stretch in mid-May,
according to market research firm MarketHistory.com. The Nasdaq
bolted up 77.73 points, or 3.61 percent, to 2,233.66.

The broader Standard & Poor's 500 Index rose 16.46
points, or 1.3 percent, to 1,283.57, buoyed by software maker
Comverse Technology Inc. , which was the biggest
percentage gainer and had the largest point rise in the index.

The Dow Jones industrial average rose 114.32 points,
or 1.03 percent, to 11,175.84, buoyed by high-tech heavyweights
like International Business Machines and Microsoft.